Money not flowing for Cubbie owners
THE Chinese-owned company behind the huge irrigated farm Cubbie Station is teetering, unable to pay its debts after a multibillion-dollar global buying spree.
Last month privately owned Shandong Ruyi Technology Group Co delayed for a second time this year its payments on a $200 million bond.
The company through which it owns French fashion labels including Sandro, Maje and Claudie Pierlot also missed a bond payment in June.
The delay in payments on the $200 million bond followed a state-owned financing company, Jining City Urban Construction Investment, pulling out of a $730 million deal to buy 26 per cent of Shandong Ruyi.
That fresh money — along with about $100 million from selling 29 per cent of its 80 per cent stake in Cubbie Station to Macquarie Bank last year — was reportedly to be used to meet its debt obligations.
Shandong Ruyi did not respond to requests for comment on how it now plans to pay bondholders.
Nor did Ruyi Australia respond to requests for comment on the financial performance of Cubbie Station – a giant cotton-growing property on the Queensland side of the border with NSW that is said to have water storage equal to 184,000 Olympic swimming pools.
While Shandong Ruyi’s stake in Cubbie has fallen to 51 per cent, it wholly owns the company that runs the station. Shandong Ruyi uses a Singaporean Holding company, CSTT, to house its Cubbie interests.
CSTT owns an Australian holding company which in turn controls a company called CS Agriculture. The most recent annual report for CS Agriculture — from 2018, when Shandong Ruyi still owned 80 per cent of the station — shows a net annual loss of $14.3 million.
The 2018 result revealed a halving in outlays on farming and cotton ginning compared to the previous year, as well as an 18 per cent drop in wage costs. The annual report valued CS Agriculture’s water licences at $106 million.
A July 2019 Macquarie media release announcing its investment in the station said “Cubbie Agriculture, a subsidiary of Ruyi, will continue to operate Cubbie under a long-term operating agreement”.
However Cubbie Agriculture did not exist before July 2019. Shandong Ruyi wholly owns Cubbie Agriculture via CSTT, which has not filed financials since 2017.
One of Shandong Ruyi’s other two Australian investments, the $20 million Larundel wool estate in western Victoria, was put on the market in February.
Shandong Ruyi is also a 49 per cent shareholder in wool business Lempriere Australia.
Shandong Ruyi bought into Cubbie in 2012 in a deal approved by then treasurer Wayne Swan that was estimated to be worth $240 million. As a condition Shandong had to eventually sell down its stake to 51 per cent.